LONDON (The Telegraph) - The European Union, and its most enthusiastic advocates, have long argued that its power as the world’s largest trade bloc means it is impossible to ignore. Anyone who attempted to stand up to it could simply be swatted aside, and countries might as well sign up to its rules because they would have to follow them anyway. Even worse, any country that left, such as the UK, would find itself an irrelevance on the world stage.
For much of the last 30 years, there has been a lot of truth in those arguments. But right now, the EU’s influence is dramatically fading.
It is campaigning against President Joe Biden’s nakedly protectionist green subsidies, but Washington responds with polite indifference. It has spent years threatening the American tech giants, but without any impact. And it is too hooked on Chinese exports to curb its growing industrial power. In reality, the EU is not an economic superpower anymore – and its attempts to strut on the world stage are increasingly being ignored.
Consider Ursula von der Leyen’s visit this week to Washington to try and hammer out a deal on green energy subsidies with the U.S. president. The red carpets were rolled out, there were plenty of warm and welcoming speeches. Ever since Biden launched his $300 billion-plus (£248 billion) subsidies blitz, the EU has been furiously complaining that America is stealing its jobs and undercutting its companies.
In fairness, it has a point. Volkswagen has already announced it is putting plans for a European battery factory on hold and looking to build one in the U.S. instead. Tesla has said it is cutting investments in Germany, and shifting to the American factories. Plenty more companies will follow those leads.
Von der Leyen will no doubt haggle, lament, and threaten retaliation. But there is absolutely no sign that anyone in Washington is in the least bit interested, or willing at this point to make any concessions.
It doesn’t stop there. For the last five years, every self-important commissioner in Brussels has been lecturing anyone who will listen on how it is planning to curb the power of the American tech giants, and finally bring them under regulatory control.
A massive new piece of legislation – the Digital Services Act – has been imposed on the whole bloc. And its impact? Imperceptible. The EU imposes some hefty fines on the likes of Apple and Alphabet, the owner of Google. Most are eventually overturned by its own courts, and the companies simply pay no attention.
Meanwhile, in Washington the Federal Trade Commission is overhauling the way it does business, setting rules, for example, on the way they control their app stores. On China, it is the same story. The U.S. is standing up to its major economic rival. It has banned the export of semiconductors to the country, and is on the brink of an outright ban on TikTok, the phenomenally successful social media app that also collects huge amounts of data.
And the EU? A few grandiose proclamations aside, it has done precisely nothing, allowing China to buy whatever it wants on the continent (such as Hamburg port, one of the largest on the continent) and embed its telecoms equipment into the continent’s infrastructure.
In reality, the U.S. and China are the two genuine economic superpowers. The EU, by contrast, cuts a diminished figure and one that is rapidly shrinking on the global stage. It is not hard to understand why.
First, the growth of developing economies in Asia and Africa means it represents a far smaller share of the global economy than it used to. Its share of global GDP has halved in the past four decades, from around 30 per cent of global GDP in 1980 to just 15 per cent today.
Over the same period, America’s share has fallen from 25 per cent of global output to 24 per cent. As Asia and Africa grew richer, so too did the U.S., but the EU stagnated. Forty years ago, the EU was the largest economic bloc in the world, but now it is in third place behind the US and China, and getting smaller all the time.
And it is a relative industrial failure, too. You can’t hope to regulate technology, for example, when none of the major companies are European. Likewise, while Volkwagen and Renault are trying to compete in electric vehicles, they are nowhere close to Tesla, Ford, or the emerging Chinese competitors such as BYD. Most of Europe has been so poor at creating new companies, or re-inventing old ones, that it is no longer relevant in most major industries.
Add it all up, and there can only be one conclusion. The EU has allowed its position as an economic superpower to slip. As a result, while a country like the UK clearly doesn’t gain any influence by leaving, it doesn’t lose any, either. There is simply nothing to lose.
The EU keeps trying to strut on the world stage, demanding concessions from its major rivals, and threatening reprisals if others fail to listen.
But it is making itself increasingly ridiculous. Joe Biden is courteous whenever he meets the president of the European Commission. But that shouldn’t fool us into believing that Washington is taking a great interest in what she has to say.
And we are kidding ourselves if we think that the Biden administration will back down on poaching VW’s battery factories, or any other European assets. The EU’s clout is gone – and it is difficult to see how it will claw it back.